Follow-up Lenovo: How to Break Enterprise-level Business

Lenovo’s enterprise-class business entered the market for the first time with the establishment of an independent business group with the start of the new fiscal year.

After all kinds of hardships, such as Hewlett-Packard, Dell, and other competitors, are still unsuccessful in the enterprise-class market, as the association of latecomers can do it?

What kind of company is Lenovo? The first thing people think of is definitely that Lenovo is the world's largest PC company. After nearly two years in the mobile Internet market, people are increasingly accepting that Lenovo is a PC+ product manufacturer with PCs, mobile phones, tablet PCs, and smart TVs. But now, if Lenovo labels itself as an “IT Infrastructure Provider,” do you think Lenovo deserves its name?

On April 15th, Lenovo’s enterprise-class business team faced the media for the first time after entering the new financial year. The business leaders from front-end R&D and front-end sales frontline explained the development status and future plans of Lenovo’s enterprise-class business in detail. At the same time, it also answered some of the reporter's questions.

Do hardware or solution?

When it comes to doing business at the enterprise level, people first think of technical strength. In this regard, Lenovo?

As PC global market sales decline year after year, former PC overlords Hewlett-Packard and Dell have begun their own transformation journey, and their transformation direction has no exception aimed at the enterprise-class market. After acquiring a series of hardware and software vendors, HP and Dell are still at the stage of exploring the enterprise-level business. In the short-term, it is still difficult to see the rising sun of successful transformation.

As a company that has come all the way from “trade, industry, and technology”, Lenovo has developed into the world’s largest computer company, but its technical strength has been questioned because of the WinTel architecture that can be used by PC manufacturers. Space is limited. However, the enterprise-class market is completely different. It not only covers various hardware and software products such as servers, storage, networks, and software, but also is closely related to data centers, big data, and cloud computing. In the eyes of people in the industry, to become the king of the enterprise market, not only must have a full range of IT infrastructure products, but also have an end-to-end comprehensive solution tailored to customers in various industries, even need to be like IT giant IBM. In that way, it created various advanced concepts that lead the development trend, delivered values ​​for customers, and formed its own value chain in the enterprise-level market. Obviously, this kind of expectation is a very big challenge for the current association.

From April 1, 2014, Lenovo Group started to adopt a new organizational structure and set up a special enterprise-level business group. With Lenovo’s pillar business—PC, key transformation business—mobile internet, future star business—cloud computing, it's time to see Lenovo’s attention to enterprise-level business.

Liu Zheng, general manager of mature industry and general manager of enterprise-level product marketing of Lenovo Group's large customer division in China, told this reporter clearly that Lenovo's enterprise-level business positioning is “becoming a provider of IT infrastructure solutions” and its services include servers, Storage, software, solutions and services. At present, Lenovo already has fifty or sixty solutions in nine industries, and there are more than 200 solutions in the mobile Internet area.

Wang Bingbing, senior director of the global server R&D center of Lenovo's enterprise-class business group, frankly stated that for the development team that he leads, it is necessary to focus on the development of server hardware. "How can we meet the needs of customers in various industries for the overall solution? At this stage, we will adopt more strategic cooperation methods." Wang Huabing said that different manufacturers have different strategies for entering the enterprise market, and some Vendors choose to provide end-to-end solutions, and what Lenovo is currently doing is to ensure Lenovo’s hardware products are used by customers in a variety of application environments and, like Oracle and EMC, become the world’s number one in their field.

How to leverage IBM x86 server business?

In fact, Lenovo already has the strength to make its peers in the server field. As early as 1995, Lenovo began to enter the server field, and gradually became one of the few manufacturers in the industry with server chip-level application development capabilities. In 2012, Lenovo launched a new server brand "ThinkServer" and vowed to enter the top three global servers within three years. Lenovo actually achieved this goal one year in advance.

"In fiscal 2013, Lenovo's server business for the first time leapt to the third place in China's x86 market. The market share of tower server sales reached 34%. The sales of two-way rack servers increased by 25% year-on-year, and the sales of four-way servers increased by 47% year-on-year. The market share of high-density servers was as high as 35%, sales of server channel business grew by 69% year-on-year, and sales of storage products increased by 51.7% year-on-year.... "Looking at the achievements made by Lenovo's enterprise-class business, Liu Zhengzheng is a treasurer. At the same time, he also admitted that Lenovo has shortcomings in the coverage of server products, especially in the eight-way server and blade servers are still lacking, but these issues will become the past when Lenovo's acquisition of IBM x86 server business is completed .

According to Liu Zheng, this merger will probably take about three months before it can formally complete the approval process of the relevant government. "From the lowest entry-level products to the highest-end converged architecture and blade-based products, Lenovo's enterprise-class product line will have a more complete product portfolio."

As for the integration of IBM's x86 server business with Lenovo's existing ThinkServer server business, Wang said that from a product perspective, Lenovo’s strategy is very clear – the first is to ensure the interests of customers and to ensure that the products and services obtained by customers are not Affected by anything. “In 2015 and 2016, we are trying to maintain the relative independence of our current product line. We will begin to consider the future product development strategy after the acquisition is really passed.” According to him, Lenovo took over the IBM PC business and spent about that time. It takes only one and a half years to complete the integration of R&D, channels, and brands. The server business is much more complicated than the PC, and the entire integration process will definitely be longer.

How to break out of product homogenization encirclement?

"Everybody can rest assured that we will continue to continue IBM's product roadmap, will not make any changes, and will not reduce the investment in research and development." Wanghua Bing is also confident that Lenovo's R & D strength, he confidently said, "in two On the road server, we will not be worse than any of our competitors."

In fact, Lenovo started to lay out the enterprise market very early. In the past year and a half, Lenovo's server business has expanded from a single layout with only the Beijing R&D center to Beijing, Taipei, China, and the global R&D network in the United States and Brazil. The R&D personnel in these four places have soared from the original 70 people to more than 300 now. Their average industry R&D experience has been more than 10 years, including 50 top industry professionals.

Xie Zhengwei, director of product development at IPDC, Lenovo's enterprise-class business group, is a typical representative. He once worked at an R&D center in Taipei, an internationally renowned server manufacturer. Now, one of his important responsibilities is to provide customized high-density servers for Internet industry customers.

Because all server vendors currently use Intel's architecture, the homogeneity of products is very serious. To become the top seller in the server market, Lenovo must come up with its own unique things.

Lenovo ThinkServer RQ940, the fourth-generation server product that Lenovo just released, is a new four-way rack server new to Xie Zhengwei. Xie Zhengwei said that the ThinkServer RQ940 is optimized for the most demanding data-intensive workloads in the enterprise and successfully passed the highly demanding SAP HANA in-memory DB. Compared with the previous generation, the RQ940 offers up to 200% more computing performance, 3 times more memory performance, up to 170% more memory database performance, 10 times more network bandwidth, and 120% more storage I/O performance.

Xie Zhengwei believes that in order to make differentiated products, the unique design of the software part is particularly important. Good design can help customers reduce overall power consumption and improve work efficiency. In terms of system architecture design, Lenovo strives to make its products have bright spots that its peers do not have. For example, in the next-generation server products, Lenovo’s 2U products will support 6+9 hard disk partition designs and support eight PCI-E slots at the same time; Lenovo’s 1U server products will support 14 hard disks and support the chassis’s rail design. This will put 2U products in 1U space. Lenovo is relying on such high-density server products to meet the special needs of Internet giants such as Tencent and Baidu, and gain a substantial market share in the Internet enterprise market.

Six strategies for linking Lenovo's enterprise-class services

1. Improve the overall strength of enterprise-level businesses and drive the sales of products and services through solutions.

2. Focus resources on IPDC (internet/data center), public security, national defense, higher education and vocational education, medical care, radio and television, and other six industries, form a key bastion customer base, and continue to intensively cultivate small and medium-sized customers.

3. Optimize the channel structure, maintain a stable operation of the channel business, and continue to invest in the long-term competitiveness of the channel.

4. To build Sparta's talent training system, enhance the technical capabilities of Lenovo and its partners, and increase the competitiveness of the team in the enterprise market.

5. Establish a 4 to 6 dealer technical support system to increase the enthusiasm of dealers to run enterprise-level customers. Establish a technology-based call center to provide support for front-line partners such as plans and quotation.

6. Effectively integrate dual-brand and dual-sales teams to ensure the best market share. Through the acquisition of IBM x86 server business, it is ensured that the effect of 1+1 is greater than 2. (According to the speech of Lenovo's Vice President Tong Fuyu)